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D6 • BUSINESS • STAR TRIBUNE • MONDAY, JULY 31, 2006
<br />
<br />THE 1.....,.-.z~ci~ a,rs~atu ISAAC CHEIFF.TZ
<br />® ~
<br />a 1 lsm ne '
<br />e s erna 1
<br />ve e s
<br />~- The history of capitalism
<br />suggests that a transition from
<br />today's petroleum-based economy
<br />c.
<br />to a post-oil era is inevitable.
<br />t< ki`EEPING AMERICA
<br />,.~
<br />COMPETITIVE REQUIRES
<br />t: .
<br />AFFORDABLE ENERGY. AND
<br />HERE WE HAVE A SERIOUS
<br />PROBLEM: AMERICA IS
<br />'~.DDICTED TO OIL, WHICH ' ~~•''
<br />_. {.
<br />t
<br />tS OFTEN IMPORTED FROM ti ~~
<br />UNSTABLE PARTS OF THE tom' ~. _ ,~ . ~ ;' `
<br />WORLD. ))
<br />-George W. Bush, State of the Union
<br />address, Jan. 31, 2006
<br />x'he price of petroleum continues
<br />to reach new highs, with crude oil
<br />prices hovering around $75 a barrel,
<br />acid gasoli.*~e at the pump in the Unit-
<br />ed States at $3 a gallon. The unrest
<br />in the 1Vliddle East threatens to push
<br />prices even higher.
<br />It is difficult to imagine our mod-
<br />errxeconomy without oil. For the past
<br />1?5 years, fassil-fuel energy has been
<br />as American as apple pie. The au-
<br />tomobile, airplane and much of our
<br />m~cdern e<,nveniences are enabled by
<br />petroleum-based products.
<br />But from a historical perspective,
<br />shifts in energy and technology are
<br />inevitable. What is the capitalist case
<br />for seriously planning for apost-pe-
<br />~leum economy now?
<br />i~latiortal security; Our reliance on
<br />a consistently available and reason-
<br />ablypriced supply is inherently risky.
<br />But the worldwide search for oil has a
<br />secondary negative impact.
<br />Underdeveloped countries with
<br />sizable oil resources consistently re-
<br />act like vagabonds winning the lot-
<br />terv, or adecadent hotel heiress. None
<br />has leveraged oil wealth to become an
<br />advanced industrial economy.
<br />Of the international trouble spots,
<br />only North Korea is not directly or in-
<br />directly funded by petro-dollars. If oil
<br />was worth less, these countries might
<br />still be troublesome, but they'd be far
<br />less of a threat.
<br />True cost of oil: Despite today's
<br />higher costs, U.S. oil is inexpensive
<br />compared with prices in most West-
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<br />Star'f7ibune photo collage
<br />ABOUT THE AUTHOR
<br /># Isaac Cheifetz is a
<br />Minneapolis-based
<br />executive recruiter
<br />who helps compa-
<br />nieshire technol-
<br />ogy-savvy senior executives. His
<br />Commerce Chain column focuses
<br />on best practices, leadership and
<br />trends in business technology. He
<br />can be reached at www.opentech
<br />nologies.com.
<br />ern economies, and compared with
<br />historical U.S. prices in inflation-ad-
<br />justed dollars. But the pump price
<br />does not include our indirect costs of
<br />militarily ensuring stability in oil pro-
<br />ducing regions. If the direct and indi-
<br />rectcosts ofoil from unstable regions
<br />were reflected in consumer pric-
<br />es, many alternative energy sources
<br />would become more cost effective.
<br />The environmental business case:
<br />There is a sound business case for be-
<br />ing environmentally proactive. The
<br />rising expectations of middle-class
<br />consumers worldwide are a potential
<br />strain on resources, but a certain op-
<br />portunity.
<br />The essence of capitalism is look-
<br />ing forward, not fighting to maintain
<br />the status quo. Capitalism's success in
<br />spurring economic growth is rooted
<br />in "creative destruction," as described
<br />by economist Joseph Schumpeter.
<br />The success of Toyota and Honda
<br />vs. troubled General Motors and Ford
<br />is partly attributable to the Japanese
<br />firms' aiming for future markets (sub-
<br />compacts in the 1970s, hybrids in the
<br />present), while the U.S. firms stub-
<br />bornly focused on successful profit-
<br />able products (high-margin gas guz-
<br />zlers in both eras), and fought at-
<br />tempts to mandate higher mileage
<br />standards.
<br />What are the building blocks of the
<br />path toward apost-petrol future?
<br />Market-driven: Government can-
<br />not effectively mandate disruptive
<br />shifts to energy sources of the future.
<br />But it can play a leading role by seed-
<br />ing the landscape, as it did during the
<br />Cold War era by funding basic re-
<br />search, which became the foundation
<br />of Silicon Valley.
<br />Forward-looking: Subsidize future
<br />technologies, not current political di-
<br />lemmas. Congressional hearings con-
<br />sidering using the Strategic Oil Re-
<br />serve to stabilize gas prices, or inves-
<br />tigating oil company "windfall" prof-
<br />its, are distractions, not solutions.
<br />Non-ideolopcal:Both liberals and
<br />conservatives must become more rig-
<br />orous yet flexible in their approach to
<br />energy. For the right, glorifying SUVs
<br />as a symbol of liberty is dangerous
<br />in an era when we are threatened by
<br />oil-producing countries that fund a
<br />range of toxic societies and ideologies
<br />worldwide. For the left, serious con-
<br />sideration ofunpalatable alternatives
<br />like nuclear energy and Alaska drill-
<br />ingshould bepart of the solution.
<br />lh-olutionarY alternatives: It is im-
<br />possible to predict tomorrow's energy
<br />efficiencies precisely. But a variety of
<br />existing technologies have the poten-
<br />tial to reduce oil consumption incre-
<br />mentally, and together, they can put us
<br />on the path to the post-oil era. Ethanol
<br />is one obvious example. And cellulos-
<br />ic ethanol -made not from corn but
<br />from carbon-based waste products
<br />such as switchgrass, sewage sludge
<br />and wood chips - is attracting a lot
<br />of investor attention.
<br />Revolutionary alternatives: Future
<br />generations will consider us wise if
<br />we invest additional billions now in
<br />basic research, pursuing radical ad-
<br />vances in safer nuclear energy pro-
<br />duction and disposal, cold fusion,
<br />batteries, and solar, wind and water-
<br />driven energy.
<br />About 150 years ago, the United
<br />States was a rapidly growing eco-
<br />nomic and social force, in the era
<br />when coal and whale oil were the
<br />energy foundations of our economy,
<br />and petroleum was considered near-
<br />ly worthless. In 150 years, our energy
<br />sources probably will make oil the cu-
<br />riositythat whale oil is today.
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